Indian IT industry layoffs – Separating facts from hype

May 15, 2017
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It’s hard to ignore the headlines about IT industry layoffs. The layoffs are a real issue and we should be concerned about it, but we should also analyse data and trends to understand the issue better. To start with, let’s look at all the layoffs so far. But can we call these layoffs? There are no solid numbers on layoffs that have happened. It is all either speculation or secondary analysis that makes the scenario even more confusing.

Anyway, media reports are what most people go by. And, here is what was written in major media:

Wipro CEO Abid Ali Neemuchwala mentioned that 10% employees may be let go this year. Product engineering team may be most affected. Wipro current staff is at 1.81 lakh employees. Estimate is 300-400 has been let go.

Capgemini is reported to let go of 9,000 people, or nearly 5% of its workforce. The company has announced recruitment of 20,000 new employees this year. The company issued a denial of these reports soon after.

Tech Mahindra plans to lay off around 1500 across all levels.

So far, the numbers that have been let go are not massive. Not anywhere close to the media reports. And, not something that can be called as industry wide layoffs. So, it is not numbers that are scary, yet. It is the downward trend across the big companies that is upsetting everyone. Is this is the beginning of a long, low phase? Is the shine off IT industry? Are we staring at a crisis unfolding on the scale of the financial meltdown?

The answer to most of the above are negative. Hiring is slowing down a little but it has not stopped. Though people are being let off, new staff are being hired. Now, what are the possible reasons?

Can it be RPA? Not yet. Maruti has one robot for every 4 workers at its Manesar & Gurgaon car plants. But that has not happened in IT yet. We are looking at interesting experiments in MarTech and customer experience aspects but good or bad news, RPA has not really hit IT yet.

Is it H1-B visa curb? As R Chandrashekhar said in one recent interview, hype has gone much the reality. Every year only 20,000 IT professionals go to the US on H1-B. Even if that number dwindles, which has not happened so far, its impact won’t be significant for an industry that employs nearly 4 million.

Are we looking at a downturn? There is no data to support this. We can’t deny that there is some turbulence in the IT industry as well as global markets but whether it is temporary or something that will last longer is hard to tell right now.

We will know soon whether the demand for the US has dropped and if it will have an impact on the jobs here. There has also been talk about Infosys hiring ten thousand employees in the US. To say that those are Indian jobs going to US is as baseless as the noise in America about US jobs coming to India. All tech majors have been hiring local talent for years, it is part of the customer expectations as well the global ecosystem. Yes, they are putting out numbers now due to pressures in the US market but that is all there is to it.

Do you have any sources that I don’t? Or any insights, data points, anything that throws more light on the current issue??